Glad you are moving in the right direction. Does sound like your valve, but give it a day or two to be sure. You want it fully closed in the summer to keep hot water out of the cabin, and then open in the winter for heat. It is normally open, so if you disconnect the wires, it will be open and you will get heat (it would be nice if it was normally closed...).

The seals do go bad and the inside parts sieze up. It is a common failure part on all BMW's it seems. Some people try to rebuild the valves - you can get a seal kit on ebay for $55.

UPDATE 8-8-15 (I bought this part and it arrived DOA, so I would not recommend it) --> However, xyz sells a Hamburg-Technic version for $100.

The dealer (depends which dealer) wants $150-$200.

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David.X5
2001 X5 4.4i Sport
SOLD! at 160k miles